Interesting Samsung Purchase
Samsung buys CSR’s mobile business
By Simon Mundy in Seoul and Maija Palmer in London
Samsung Electronics is buying the mobile technology development business of CSR, the struggling UK chipmaker, in a $310m deal that marks the latest salvo in the smartphone industry's patent war.
Samsung and Apple have been locked in a series of courtroom battles around the world over intellectual property rights, with each seeking to block sales of the other’s products over alleged patent infringements.
Samsung’s deal with CSR gives the South Korean company more arrows in its quiver for the fight, particularly in areas of WiFi and Bluetooth connectivity, where CSR was one of the pioneers of the technology.
CSR will transfer 21 US chip patents to Samsung, and will give it a perpetual, royalty-free licence to all CSR’s patents used in handset connectivity and location services.
The move also reflects Samsung’s focus on strengthening its components business, a month after Kwon Oh-hyun, who headed that division, was appointed as the company's chief executive. The division’s profits fell by half in the first quarter even as the company's overall pre-tax earnings rose 87 per cent.
Samsung will pay $310m in cash for CSR's mobile business, the companies announced on Tuesday. This will give Samsung control of the UK group’s development operations in WiFi and Bluetooth connectivity components, as well as in chips giving access to satellite positioning systems. The South Korean group will take on 310 of CSR’s employees.
Samsung will also pay $34.4m for new ordinary shares, giving it a stake of 4.9 per cent in CSR, which will continue to make chips for other devices such as televisions and audio devices.
CSR suffered a widening loss of $16.6m in the first quarter of this year, and its shares have lost nearly half their value since the beginning of last year, leaving it with a market capitalisation of £434m ($680m).
The UK company’s $484m takeover of US chipmaker Zoran last year met with widespread shareholder opposition, and it has been hurt by the declining fortunes of key customers including BlackBerry-maker Research In Motion and Nokia.
CSR is the latest in a series of chip companies struggling to keep up with the high costs and fast pace of research and development in the mobile phone market. “We can now move our attention to areas where we have a strong market position,” said Joep van Beurden, chief executive of CSR. “We felt we didn't have the scale to compete alongside the likes of Qualcomm and Intel in that space [handset chips].”
CSR shares were up 30 per cent at 284.1p in afternoon trading in London on Tuesday after news of the deal.
